2020 – a year that’ll find its place right inside the history textbooks in the upcoming decades. Unaccountable dreams, fantasies, goals, seems to be washing down the drain. Yes, this sounds dreadful, but the earlier we accept it, the better we could manage the situation and escape from falling into the trenches. It’s good to be optimistic, but having optimism with blindfolds will do more harm than good.
With the economy crashing and finances pulsating, it’s become imperative to make smart and nimble-witted financial choices. Who knows about tomorrow when today itself seems uncertain?
Your dreams and plans are going no-where. This year is evidence of Darwin’s evolutionary theory of survival of the fittest (or maybe of the scrupulous ones). It is becoming quite clear with each passing day, and many are facing job and financial insecurities.
So, let’s get to the point, how exactly can one get on to managing finances during COVID-19 crisis.
1) Limit your expenditure
Everyone knows it’s better and smarter to be safe than sorry. Do not go around purchasing those ray bans, thinking of how stunning you’ll look under the sun. Remember, it’s time to stay indoors. Purchasing for such redundant kinds of stuff will only pinch your pocket all the more. Understand and note down the places where you are spending unnecessarily and curb it.
2) Unsubscribe from those temptations
That online mail/advertisement which lures you into buying that pizza, when your mom has made mouth-watering parathas understand, it’s time to unsubscribe. Do not let those advertisements and fancy looking, filled with discounts, and offer by newsletters trick you. If it is not in your sight, it remains out of your mind, this works!
What is it that our parents lecture us about, the moment we start earning-the importance of saving? Guess what, and the importance has just increased. With the halt in transportation and termination in offline shopping and dining, this could be a blessing in disguise for a few.
It is the perfect chance to snowball your savings. By any chance, if you start facing salary cuts or god forbid, but in case you lose your job with the ongoing recessions or furloughed briefly, it is the amount of money that you have saved, which will assist you.
4) Alternate source of income
It is not sensible to eat out of your savings, and it would get depleted at a certain time. Try to indulge in other activities like freelancing, pursue sources through which you can monetize from your expertise.
It is during such times of crisis where ideas are born, just keep yourself calm and seek new opportunities. Also, do not liquidate your fixed assets like gold, property unless extremely necessary.
5) Beware of fraud
This could be the best time to fool people with dicey offers or enticements, to indulge in activities with promises to double the money. Always verify the authenticity of such deals.
With the increase in the number of lay-offs and tumbling of the markets, there would be plenty who would indulge in illegal activities. Few would seize the opportunity by taking advantage of the chaos created. Remember a cautious and an alert mind prevents misfortunes.
6) Invest in stock markets wisely
Right-now it is advisable to invest in shares only if you are 100ft away from facing a financial crisis or only if you have absolute exemplary knowledge of the functioning of this field. The stock market industry is quite unpredictable, and with the present shock-waves in the economy, it’s better to refrain unless certain.
A good substitute to Stock Market is SIP in a mutual fund if you are keen to earn a stable ROI on a longer horizon. If you have unutilized funds and want to optimize returns, gold is one of the safest bets.
7) Borrow and lend
Borrowing money from banks through loans is the safest option or from a trusted friend would also not harm. However, only do so with a fool-proof plan of how you’ll repay the dues. If you are the one lending the cash, only accept to help if you have the confirmation that the person would be able to reinstate the borrowed amount.
8) Multiple bank accounts
With more banks undergoing moratorium, it is sensible to open accounts in multiple banks so that you would not be rendered cashless in case of any unforeseen emergency.
9) Keep away from gambling
With these atypical situations and anomalous circumstances, no one can foretell about the times lying ahead. No matter how alluring and addictive online gambling may look at present times, it is rational to abstain from it. It could lead to debt formation and result in financial uncertainties.
10) Other job opportunities
If you believe that you are currently working in a sector that has been affected and would remain affected post-COVID-19, do not wait for the doomsday. Try to upgrade and join a spherical other than the one you were working in.
Shifting onto a job in essential services would be a good option. However, only give up or transpose if there is a chance of recruitment and growth in that domain.
With limited financial resources, it becomes very crucial to identify and distinguish the necessary expenditure from the ones which are expandable. This will help curb the disbursements, thereby increasing the savings.
Make a detailed list of income in-flows and out-flows. This helps avoid impulsive spending as you would have conscious knowledge of where your money comes from and goes to. Skip the luxury purchases and try to find inexpensive substitutes for it.
Buying clothes, jewelry, and other articles of entertainment should not be prioritized. Share the streaming platforms among friends to distribute the costs. You will notice the increase in money saved through meticulous budgeting.
12) Avoid taking Credits/Loans.
As the economy is shrinking, several companies are reducing their workforce to cut costs and avoid losses. With unemployment rates up surging, the volatility of jobs is also rising. Without a certain and stable source of income, taking credits or loans is high risk-oriented.
You may think that taking loans would help, but if we consider the high-interest rates and the narrow source of income, paying them off would be more challenging. The inability to pay off the debts would lead to further borrowings. Accruing such debts would leave you in a vicious cycle, which is very difficult to escape.
13) Emergency Funds
These are the funds that you have been saving for old- age or future predicament. In case of monetary shortage, these funds come to your aid. These funds are usually set aside with long term policies giving high rates of interest.
You may hesitate to withdraw from those, but it is a better option than borrowing or issuing loans, especially during such times of uncertainty. Paying the penalties is preferable to piling debts.
14) Timely Payment of Bills and Insurance
If you have pending insurance premiums or bills, pay it due diligence. It is imperative as such insurance claims come handy when in dire need.
Healthcare and Mediclaim policies are most important during this pandemic. With limited income sources, these might help lessen the financial burden if and when required.
15 Government Aid and Assistance
Governments in several countries have given benefits and subsidies to those in need. Several tax benefits, monetary relief funds, incentives, etc. have been awarded to people to help them recover and survive the pandemic.
In fact, not only governments but several banks and lending institutions have also decreased the interest rates and waived penalties. Check for the categories or slots of assistance that you might be eligible for.
16) Invest Smartly
Do not be in a hurry to withdraw or make investments. Currently, the stock market is highly fluctuating and unpredictable. Hateful speculations and investments may lead to losses. The bonds and stocks with low rates at the moment may rise rapidly later, and those with high return rates may dip.
With the rampant spreading of misinformation and rumors, it is safer to refrain from making any huge investments. Although a few guarded and smart small investments might do the trick.
17) Maintain Physical and Mental Wellbeing
Self-isolation has brought many people face-to-face with the problems and anxieties that they were neglecting. Henceforth the rising cases of mental disorders. Physical wellbeing is also essential as it helps boost the immune system as well as alleviate stress.
Meditating, exercising, cooking, or engaging in your hobbies is an excellent way to channel your energies positively and productively. Meanwhile, learning new skills or gaining more knowledge also provides extra stimulation and consequently increases your efficiency.
In case you are under serious money, crunches just being able to sail through is sufficient during these unprecedented times.
Now, having an insight on these points and keeping precarious bits of advice at bay, it would be possible to manage the finances during these crisis-ridden times effortlessly.